The World Economic Forum (WEF), an independent organization committed to addressing critical world challenges, has issued a White Paper to suggest improvements in the next generation of digitally native carbon markets.
The document is called “Recommendations for the Digital Voluntary and Regulated Carbon Markets” and the briefing paper can be accessed here.
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The paper lists the challenges facing current carbon markets and suggests recommendations for improvements so that they can deliver positive long-term environmental, social and economic impact.
The lead authors of the briefing paper pointed out are: Evîn Cheikosman – Director of Blockchain Law for Social Good Center, University of San Francisco, Policy Analyst, CISA, World Economic Forum, USA (2020–2023), Josh Knauer – Co-Founder of ReSeed.farm, Lauren Serota – Advisor at Funga. It is also contributed by the Crypto Sustainability Coalition’s Working Group on Blockchain Carbon Credits.
The document discusses common issues with carbon markets and focuses on emerging forms of distributed ledger technology (DLT) and their applicability to carbon markets. According to the World Economic Forum, DLT is just one of the many technologies needed to fully enable a digitally native carbon market.
It allows the carbon credits to be represented as universally unique data entities in a digital end-to-end environment which makes it possible to verify a credit’s provenance, track its secondary exchange and retire it permanently, without the need for centralized intermediaries.
One of the recommendations outlined in the paper would improve accessibility in the markets – ensuring carbon markets adopt a common baseline taxonomy to provide clarity. That means they should have standardized and detailed labels to enable ease of understanding and comparability.
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It also suggests the use of open-source Measurement, Reporting, and Verification (MRV) protocols to help improve carbon markets’ transparency, credibility and effectiveness. The protocols should be scalable, inexpensive, and easily peer-reviewed to achieve that.
The White Paper aims to improve clarity, action and necessary steps on harnessing emerging technologies to empower the next generation of solutions to the climate change challenge. It concludes that how effectively the potential solutions to this global existential threat are navigated may well determine the future of life on this planet.